QUESTION 1

1. Which of the following is a positive entry into Australia's financial account?

   		An Australian firm sells coal to a German firm.
   		An Australian investor buys a Japanese bond.
   		An Australian firm buys and builds a factory in Indonesia.
   		A Chinese investor buys an Australian government bond.
   		An Australian firm buys a German corporate bond.

1 points   

QUESTION 2

1. Suppose that Australia's price level is 125, the British price level is 100, and the nominal exchange rate of pounds to the dollar is £0.60/A$1, then the real exchange rate of pounds to the dollar is:

   		0.60.
   		0.75.
   		0.33.
   		0.48.
   		0.80

1 points   

QUESTION 3

1. According to the saving and investment equation, if net foreign investment falls by $35 million:

   		national savings minus domestic investment (i.e. S – I) will fall by $35 million.
   		domestic investment will fall by $35 million.
   		national savings will rise by $35 million.
   		consumption will fall by $35 million.
   		national savings minus domestic investment (i.e. S – I) will rise by $35 million.

1 points   

QUESTION 4

1. A current account surplus implies:

   		Domestic savings < domestic investment
   		Domestic savings > domestic investment
   		Negative net foreign investment.
   		Imports > exports
   		A financial account surplus.

1 points   

QUESTION 5

1. In an open economy, monetary policy, in the short run, has:

   		an impact on aggregate demand as well as aggregate supply.
   		no impact on aggregated demand.
   		the same impact on aggregate demand as compared to a closed economy.
   		a smaller impact on aggregate demand as compared to a closed economy.
   		a larger impact on aggregate demand as compared to a closed economy.

One feature that separates Linux from other operating systems is that the source code, along with any changes, remains public.   Closed source operating systems, where developers refuse to share some or all of the code, may hinder third-party software developers who create programs and apps for the operating system.

Supporters of open source maintain that open source software enables developers to examine, correct and enhance code to create better programs. Communities of open source programmers can make changes immediately, which they claim results in higher-quality software.   For example, proponents of open source software use Linus, which is known for its speed and stability.   Of the 500 fastest supercomputers, 90 percent use variants of Linus.   Companies and nonprofit organizations can distribute and sell their versions of Linus.   This enables those without the expertise to modify open source software to benefit from the creative efforts of the Linux community.

Fear of viruses and other security concerns can lead some to question about whether open source software is worthwhile. Dishonest and antonymous developers can use open source software to create programs, that may be malware. Proponents of closed source software also argue that companies and developers should be able to control and profit from operating systems they create.

Are the security concerns about open source software legitimate? Why or why not? What might be some of the advantages and disadvantages of open source versus closed source operating systems? Does the open source model lead to higher-quality software? Why or why not?

The following transactions relate to Academy Towing Service. Assume the transactions for the purchase of the wrecker and any capital improvements occur on January 1 of each year. 2016 1. Acquired $79,000 cash from the issue of common stock. 2. Purchased a used wrecker for $41,000. It has an estimated useful life of three years and a $10,000 salvage value. 3. Paid sales tax on the wrecker of $5,000. 4. Collected $65,100 in towing fees. 5. Paid $12,900 for gasoline and oil. 6. Recorded straight-line depreciation on the wrecker for 2016. 7. Closed the revenue and expense accounts to Retained Earnings at the end of 2016. 2017 1. Paid for a tune-up for the wrecker’s engine, $1,800. 2. Bought four new tires, $2,150. 3. Collected $71,000 in towing fees. 4. Paid $18,900 for gasoline and oil. 5. Recorded straight-line depreciation for 2017. 6. Closed the revenue and expense accounts to Retained Earnings at the end of 2017. 2018 1. Paid to overhaul the wrecker’s engine, $5,700, which extended the life of the wrecker to a total of four years. The salvage value did not change. 2. Paid for gasoline and oil, $20,000. 3. Collected $74,000 in towing fees. 4. Recorded straight-line depreciation for 2018. 5. Closed the revenue and expense accounts at the end of 2018. 4.value: 50.00 pointsRequired information b. For each year, record the transactions in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2016: 2017: 2018:

32. Which of these new product characteristics is LEAST likely to increase the adoption rate:

-   product that can be demonstrated to outperform current products.

-   product that costs less than presently used products.

-   product that requires new patterns of use compared to existing products.

-   product that can be tried or sampled in small quantities.

33. Test marketing:

-   attempts to record consumers’ responses under reasonably realistic market conditions.

-   is basically the same as the screening and development stages of the new product development process.

-   is more common for industrial products than for consumer products because industrial markets usually involve fewer customers.

-   should be done slowly so that competitive actions can be observed and categorized.

34. Which is WRONG with regard to new products and product innovation:

-   most “new” products are just slight modifications of existing products.

-   planned obsolescence can cause some consumers to delay their purchases in order to wait for product improvements.

-   the most innovative new product ideas usually originate in research labs rather than in the marketplace.

-   the most successful new product innovation programs are organized just for a particular purpose; they are not ongoing research programs.

36. Meghan was disappointed to be assigned to work on a product in the mature phase of the product life cycle. Once she started working with the product team, she discovered all the following EXCEPT:

-   changes in consumers’ preferences were opening up new market segments.

-   end-of-cycle strategies were the most profitable for companies.

-   she could take the product into a new market segment to stimulate new growth.

-   some simple product redesign could completely reinvigorate the product.

On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021? On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021? On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021? On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021? On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021? On January 1, 2020, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities. The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: Carrying Amount Fair Value Cash and receivables $ 175,000 $ 175,000 Computing equipment 5,585,000 6,740,000 Patented technology 165,000 4,130,000 Trademark 215,000 2,130,000 Liabilities (250,000 ) (250,000 ) Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost. During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared 2020 $ 1,930,000 $ 215,000 2021 2,115,000 225,000 How much of Ridge Road’s $4,000,000 payment for Sauk Trail is attributable to goodwill? What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021? What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021?

Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. The following information relates to the lease agreement.

b. Calculation for annual rental payment

d. Prepare the journal entries Jensen would make in 2020 and 2021 related to the lease arrangement

e. Prepare the journal entries Glaus would make in 2020 and 2021

The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2021. At December 31, 2020, inventories were $111,000 (average cost basis) and were $115,000 a year earlier. Cecil-Booker’s accountants determined that the inventories would have totaled $137,000 at December 31, 2020, and $142,000 at December 31, 2019, if determined on a FIFO basis. A tax rate of 25% is in effect for all years.

One hundred thousand common shares were outstanding each year. Income from continuing operations was $310,000 in 2020 and $435,000 in 2021. There were no discontinued operations either year.

Required:
1. Prepare the journal entry at January 1, 2021, to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Prepare the 2021–2020 comparative income statements beginning with income from continuing operations (adjusted for any revisions). Include per share amounts.

The adjusted balances at December 31, 2020, for Derlak Enterprises are shown in alphabetical order below:

*The owner, Lee Derlak, made no additional investments during the year.

Required:
Prepare a comparative classified balance sheet at December 31, 2020. (Record the accounts in the given order. Enter all amounts as positive values.)

Analysis Component:
Are Derlak's assets financed mainly by debt or equity in 2019? in 2020? Is the change in how assets were financed from 2019 to 2020 favourable or unfavourable?

The adjusted balances at December 31, 2020, for Derlak Enterprises are shown in alphabetical order below:

*The owner, Lee Derlak, made no additional investments during the year.

Required:
Prepare a comparative classified balance sheet at December 31, 2020. (Record the accounts in the given order. Enter all amounts as positive values.)

Analysis Component:
Are Derlak's assets financed mainly by debt or equity in 2019? in 2020? Is the change in how assets were financed from 2019 to 2020 favourable or unfavourable?

Carla Tool Company’s December 31 year-end financial statements contained the following errors.

An insurance premium of $64,800 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $16,300 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.)

(a) Compute the total effect of the errors on 2021 net income.

(b) Compute the total effect of the errors on the amount of Carla’s working capital at December 31, 2021.

(c) Compute the total effect of the errors on the balance of Carla’s retained earnings at December 31, 2021.